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adjusting entries - supersam - 10-04-2011
Can anyone tell me how these adjusting entries will be treated in the final accounts ie P&L and Balance Sheet?
1.An item of plant, originally purchased for £500,000 on 1 March 2008, was sold on
2 December 2010 for £390,000. No entries or adjustments have been made to the
trial balance as at 31 December 2010 for this sale except to debit the sale proceeds to
bank and credit a suspense account with the equal and opposite entry. Depreciation is
charged by Duo for a full year in the year of purchase and none in the year of sale.
2.During the year an item of plant costing £350,000 and with accumulated depreciation
of £110,000 was sold for £190,000. The sale proceeds have not yet been received and
no adjustments have been made to the accounts in respect of the sale of the plant.
- mshahbazakhtar - 10-26-2011
<blockquote id="quote"><font size="1" face="Verdana, Arial, Helvetica, san" id="quote">quote<hr height="1" noshade id="quote"><i>Originally posted by supersam</i>
<br />Can anyone tell me how these adjusting entries will be treated in the final accounts ie P&L and Balance Sheet?
1.An item of plant, originally purchased for £500,000 on 1 March 2008, was sold on
2 December 2010 for £390,000. No entries or adjustments have been made to the
trial balance as at 31 December 2010 for this sale except to debit the sale proceeds to
bank and credit a suspense account with the equal and opposite entry. Depreciation is
charged by Duo for a full year in the year of purchase and none in the year of sale.
2.During the year an item of plant costing £350,000 and with accumulated depreciation
of £110,000 was sold for £190,000. The sale proceeds have not yet been received and
no adjustments have been made to the accounts in respect of the sale of the plant.
<hr height="1" noshade id="quote"></font id="quote"></blockquote id="quote">
i the question is silent about the depreciation rate of the asset hence it is assumed to be 10% on WDV.
ii the question is also silent about the year ending date of the company hence it is assumed to be December 31.
Cost 500000
YE December 31, 2008
Dep 50000
WDV 450000
YE December 31, 2009
Dep 45000
WDV 405000
Sale price 390000
WDV 405000
Acc Dep 95000
Original entry
Bank DR 390000
Acc Dep DR 95000
Loss on disposalDR 15000
Plant Cr 500000
Entry passed in the books
Bank Dr. 390000
Suspense Cr 390000
Rectifying Entry to be passed now
Suspense Dr. 390000
Acc Dep DR 95000
Loss on disposal DR 15000
Plant Cr 500000
Hope that said issue has been resolved.
Any queries are welcomed.